What is Expense Management?

In today’s corporate world, business travel and expenses are on the rise, according to the Global Business Travel Association. And albeit necessary, expense management can be a constant struggle for organisations, creating pain points that extend beyond just CFOs and Finance teams.  

In simple terms, expense management is a process businesses use to collect and manage employees’ work-related expenses. These include all the costs employees incur during business trips, office supplies, equipment to improve home office conditions, and even business lunches or dinners. These are then processed, verified for compliance with internal policy and local regulations, reimbursed, and audited.  

Traditionally, expense management has been done through manual processes, creating vicious cycles of slow reimbursements, frustrated employees, lack of visibility and, above all else, an increased risk of fraud. This translates into real headaches for the finance teams and CFOs, as they spend most of their time struggling to understand how to optimise costs given the lack of data at their disposal while still facing stallings in their cash flow due to slow reimbursement processes. It can also make the organisation more vulnerable, as manual-based processes and paper reports are more prone to errors, leading to fraudulent claims, increasing spending and putting the company at risk in case of an external audit.  

There’s no denying that expense management can be a strategic asset for finance leaders, but it can also significantly impact a company’s bottom line, given the pain points traditional and paper-based processes can bring forth. Expense management can be a great opportunity for CFOs to optimise costs, improve efficiency, and gain valuable insights into the organisation’s spending habits. By addressing the issues and modernising the system, CFOs can handle expense management while still having time to focus on other strategic decisions.  

Expense management is a strategic tool that can help teams make more informed decisions, optimise costs, and mitigate risks.

Often seen as a back-office chore, expense management has evolved into a powerful tool for CFOs and finance leaders who aim to maintain control over their budgets and, as a result, save on costs. When modern tools are used, the processes are simplified and essentially made easier for everyone involved, especially for the Finance team.  

These are some of the main benefits of expense management when organisations choose to use digitised solutions for their processes. 

Make informed strategic decisions

Aside from streamlining the expense management process, the right software provides valuable data that can be essential for strategic decision-making and uncovering financial benefits.  

Analysing spending patterns allows the company to assess the issues leading to higher spending patterns. This can lead to adjusting company policy to find cost-effective alternatives or encouraging employees to explore more budget-friendly options.  

Improve cash flow by streamlining processes

Paper-based processes create cash flow bottlenecks and are often time-consuming for employees and the finance teams. Manual data entry, chasing down receipts, and lengthy approvals delay reimbursements, but expense management solutions can automate these tasks, allowing for faster reimbursements and quicker access to company funds.  

If a team member needs to travel to attend a conference, they can automatically scan receipts and submit their claims instantly, wherever they are, and both their manager and the finance team can approve them immediately. This frees up cash flow that can be used for strategic investing, enhancing growth.  

Reduce risks by automating compliance checks

Fraudulent expense claims pose great risks for organisations, especially when handling them through manual processes, leaving room for human error or even deliberate manipulation.  

This risk can be mitigated using smart expense management software with built-in compliance features and policy checks. When receipts are uploaded, the software can perform multiple verifications to ensure the expense complies with internal policy, whether it hasn’t been duplicated, and whether the receipt is valid. This minimises the potential for fraud and frees finance teams from time-consuming manual audits, allowing them to focus on more strategic tasks. 

The responsibility of managing employee spending involves a collaborative effort between different departments. Although some key players handle most of the workload, every member of the organisation has a part to play in ensuring the process is seamless and productive for all those involved.  

Human Resources (HR)

While HR teams might not be directly involved in the day-to-day processing of expenses, they are often the ones responsible for setting expense policies. They might also handle employee perks related to expense reimbursement, like gym memberships or home office benefits. 

HR is also tasked with ensuring employees know the policy and are aware whenever it’s updated so they can stay compliant.  

Finance Teams

Finance is the core of expense management, as they oversee the entire process from start to finish, from setting up systems to creating policies, approving, reimbursing, and even keeping the records up to date.  

Depending on the organisation’s structure, the tasks can be divided between accountants, who usually keep records of expenses, track company spending, and monitor expense reports. This information is then passed on to other members of the Finance team, who set budgets based on the insights of the data collected.  

Finance and accountants set expense policies based on these numbers, then work with HR teams to ensure policies are clearly communicated and followed by employees.  

Employees & Managers

All employees and managers are essential to ensuring the success of the expense management process as they submit expenses and approve claims, respectively. While their role might seem obvious, it is often the most underrated.  

Employees must know and understand policies so they can submit compliant claims. They also need to be aware of the importance of completing the reports accurately, including all the expense details, as this minimises processing time and reduces the need for follow-up questions. On the other hand, managers are responsible for ensuring they review and validate all expenses while guaranteeing that they align with the department’s budget.  

The organisation and specific tasks may vary depending on its size and structure. Smaller companies might have dedicated expense management specialists within the finance department, responsible for overseeing all matters related to business expenses, while enterprises might have a dedicated team as the volume of expenses is significantly higher.  

Choosing the right expense management solution goes beyond simply automating processes. It’s about selecting a strategic partner that aligns with the organisation’s needs while empowering the employees and the finance team to achieve their goals. 

Keeping track of all business expenses monthly can be exhausting, tedious, and lengthy, preventing the team from focusing on other pressing tasks that can further benefit the organisation. Submitting and approving expenses can all be done on the go, through a smartphone, in just a few seconds.  

Systems like Rydoo are powered by AI capabilities and a strong OCR engine that can read receipts, extract data, and fill out all the necessary information in under 20 seconds. Managers are then notified of the claim and can approve it through the app, wherever it is, at whatever times suit it most.  

Finance teams gain more control with a lighter workload and the power to make faster decisions based on the insights provided by the software. By configuring the corporate expense policy within the system, it can analyse and automatically process the bulk of expenses, flagging only those that don’t fit the criteria or deserve further verification. This means faster reimbursement cycles, less risk of fraudulent expenses, and cost reduction. 

The definition of expense management goes far beyond submitting and approving business spending claims. It’s a strategic tool that can help teams make more informed decisions, optimise costs, and mitigate risks.  

Opting for modern solutions and ensuring all teams collaborate in following the necessary procedures can transform the process from a burden to a smooth sailing experience that benefits all those involved. From the employees, who no longer have to face long reimbursement cycles, to managers who can approve expenses on the go, to the finance team, who can make better decisions to further benefit the organisation without having to worry about facing the risk of fraud. This frees up time to focus on what truly matters: growing the company.